2012-27844 Reso RESOLUTION NO. 2012-27844
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF
THE CITY OF MIAMI BEACH APPROVING AND AUTHORIZING
THE MAYOR AND CITY CLERK TO EXECUTE A FIRST
AMENDMENT TO THAT CERTAIN RETAIL LEASE
AGREEMENT BY AND BETWEEN THE CITY OF MIAMI
BEACH, THE MIAMI BEACH REDEVELOPMENT AGENCY
(RDA) AND PENN 17, LLC. (LESSEE), DATED SEPTEMBER
16, 2011, INVOLVING THE LEASE OF APPROXIMATELY 7,807
SQUARE FEET OF GROUND FLOOR RETAIL SPACE AT THE
PENNSYLVANIA AVENUE GARAGE, 1661 PENNSYLVANIA
AVENUE, MIAMI BEACH, FLORIDA; SAID FIRST
AMENDMENT CORRECTING THE GROSS RENTABLE RETAIL
SPACE FROM 7,807 SQUARE FEET TO 7,655 SQUARE FEET
AS WELL PROVIDING FOR CORRESPONDING REDUCTIONS
IN LESSEE'S ANNUAL RENT FROM $585,525, TO $574,125,
AND IN THE CHARGE FOR COMMON AREA MAINTENANCE
(CAM) FROM $100,370 PER YEAR,TO $98,850 PER YEAR.
WHEREAS, on April 13, 2011, the Mayor and City Commission adopted Resolution
No. 2011-27647, approving a Lease Agreement (the Lease), between the City, the RDA
and Penn 17 LLC. (Lessee), having a term of nine (9) years and 364 days, for use of
approximately 7,807 square feet of ground level retail space at the Pennsylvania Avenue
Garage, 1661 Pennsylvania Avenue, Miami Beach, Florida, for a restaurant(primary use),
with ancillary uses for a bakery, a bar/cafe, and a book and gift shop; and
WHEREAS, on January 11, 2012, the Mayor and City Commission authorized the
Administration to proceed in separating out the retail portion of the Pennsylvania Avenue
Garage via a condominiumization process so as to ensure the continued tax exempt status
of the municipal parking garage; and
WHEREAS, the condominiumization process involved the preparation of a certified
boundary survey, revealing the actual size of the aforestated retail space to be 7,655
square feet, and not 7,807 square feet as defined in the Lease; and
WHEREAS, in order to address the difference in square footage, it is necessary to
amend the Lease to reflect the adjusted square footage, and accordingly to also reduce
the Lessee's annual base rent and the cost of Common Area Maintenance (CAM).
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, that the Mayor and City Commission
hereby approve and authorize the Mayor and City Clerk to execute a First Amendment to
that certain Retail Lease Agreement by and between the City of Miami Beach, the Miami
Beach Redevelopment Agency and Penn 17, LLC. (Lessee), dated September 16, 2011,
involving the lease of approximately 7,807 square feet of ground floor retail space at the
Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue, Miami Beach, Florida; said
First Amendment correcting the gross rentable retail space from 7,807 square feet to
7,655 square feet as well as providing for corresponding reductions in Lessee's annual
rent from $585,525, to $574,125, and in the charge for the Common Area Maintenance
(CAM) from $100,370 per year, to $98,850 per year.
PASSED AND ADOPTED THIS 8T" DAY OF FEBRUARY, 2012.
M YO
ATTEST:
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CITY CLERK
* INCORP ORATED'
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T:WGENDA\2012\Feb 8\Consent Penn 17 LLC Amendment RESO.doc
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APPROVED AS TO
FORM&LANGUAGE
FOR CUTION
m Date
COMMISSION ITEM SUMMARY
Condensed Title:
A Resolution approving a First Amendment to that certain Retail Lease Agreement by and between the City of Miami Beach,the
Miami Beach Redevelopment Agency and Penn 17,LLC.,dated September 16,2011,involving the lease of approximately 7,807
square feet of ground floor retail space at the Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue,Miami Beach, Florida;
said First Amendment correcting the gross rentable retail space from 7,807 square feet to 7,655 square feet as well as providing
for a corresponding reduction in annual rent from$585,525 to$574,125 and the cost of Common Area Maintenance(CAM)from
$100,370 per year to$98,850 per year.
Key Intended Outcome Supported:
Increase resident satisfaction with the level of services and facilities.
Supporting Data (Surveys, Environmental Scan, etc.):
Approximately 40%of retail businesses surveyed, rank Miami Beach as one of the best places to do business and 61%of
the same group would recommend Miami Beach as a place to do business.
Issue:
Shall the City Commission approve the First Amendment to the Lease Agreement?
Item Summa /Recommendation:
On April 13, 2011,the Mayor and City Commission adopted a Resolution, approving a Lease Agreement (the Lease), having a
term of nine(9)years and 364 days, between the City and Penn 17, LLC,for use of approximately 7,807 square feet of ground
level retail space at the Pennsylvania Avenue Garage,1661 Pennsylvania Avenue,Miami Beach,Florida,for a restaurant(primary
use),with ancillary uses for a bakery,a bar/cafe,and a book and gift shop.The Resolution also approved the execution of a Pre-
Lease Due Diligence Review Agreement, granting the Tenant a maximum of six(6) months following approval of the Lease, in
which to reserve its leasing rights while advancing design and plan development and consulting with the City's Planning and
Building Departments in order to ascertain the feasibility of obtaining a full building permit prior to actual commencement of the
Lease.
On January 11,2012,the Mayor and City Commission authorized the Administration to proceed in separating out the retail portion
of the Pennsylvania Avenue Garage via a condominiumization process so as to ensure the continued tax exempt status of the
municipal parking garage. Part of the process involved the preparation of a certified boundary survey,clearly delineating the retail
and parking areas of the building. The survey revealed the actual size of the retail space to be 7,655 square feet and not 7,807
square feet as defined in the Lease Agreement between the City and Penn 17, LLC,a difference of 152 square feet. In order to
address this discrepancy, the Administration recommends amending the Lease Agreement to reflect the adjusted square
footage as provided for in the survey and to reduce the annual base rent accordingly,from$585,525 to$574,125,a difference of
$11,400.The Tenant's Common Area Maintenance(CAM)cost will also need to be reduced from$100,370 per year to$98,850
per year, a difference of$1,520.
Advisory Board Recommendation:
Financial Information:
F e of Funds: n/a Amount Account
n/a
cial Impact Summa
Ci Clerk's Office Le islative Trackin
Kent Bonde, extension 7193
Sign-Offs:
Departme irector Assista ity anager City Mana r
AP HM G
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AGENDA ITEM 1 L3
MIAMIBEACH DATE
0,__ MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the Cit ,Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: February 8, 2012
SUBJECT: A RESOLUTION OF THE MA R AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING AND AUTHORIZING
THE MAYOR AND CITY CLERK TO EXECUTE A FIRST AMENDMENT
TO THAT CERTAIN RETAIL LEASE AGREEMENT BY AND BETWEEN
THE CITY OF MIAMI BEACH, THE MIAMI BEACH REDEVELOPMENT
AGENCY AND PENN 17, LLC. (LESSEE), DATED SEPTEMBER 16,
2011, INVOLVING THE LEASE OF APPROXIMATELY 7,807 SQUARE
FEET OF GROUND FLOOR RETAIL SPACE AT THE PENNSYLVANIA
AVENUE GARAGE, 1661 PENNSYLVANIA AVENUE, MIAMI BEACH,
FLORIDA; SAID FIRST AMENDMENT CORRECTING THE GROSS
RENTABLE RETAIL SPACE FROM 7,807 SQUARE FEET TO 7,655
SQUARE FEET AS WELL AS PROVIDING FOR CORRESPONDING
REDUCTIONS IN LESSEE'S ANNUAL RENT FROM $585,525, TO
$574,125,AND IN THE CHARGE FOR COMMON AREA MAINTENANCE
(CAM) FROM $100,370 PER YEAR, TO $98,850 PER YEAR.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
BACKGROUND
On April 13, 2011, the Mayor and City Commission passed Resolution No. 2011-27647,
approving a Lease Agreement (the Lease), having a term of nine (9) years and 364 days,
between the City and Penn 17, LLC, for use of approximately 7,807 square feet of ground
level retail space at the Pennsylvania Avenue Garage, 1661 Pennsylvania Avenue, Miami
Beach, Florida, for a restaurant (primary use), with ancillary uses for a bakery, a bar/cafe,
and a book and gift shop. The Resolution also approved the execution of a Pre-Lease Due
Diligence Review Agreement, granting the Tenant a maximum of six (6) months following
approval of the Lease, in which to reserve its leasing rights while advancing design and
plan development and consulting with the City's Planning and Building Departments in
order to ascertain the feasibility of obtaining a full building permit prior to actual
commencement of the Lease.
The Pre-Lease Agreement which expired on October 13, 2011, contained two milestones,
requiring the Tenant to have a) entered into a contract with a licensed architect/engineer
and b) to have submitted a complete application for a building permit, evidenced by the
issuance of a building permit process number by August 13, 2011. However, due to the
Commission Memorandum
Penn 17, LLC-Retail Lease Amendment
February 8,2012
Page 2 of 3
complexity associated with addressing some of the design issues, including, but not limited
to, the installation of grease traps, additional sub-grade plumbing and kitchen exhaust
venting, the Tenant was unable to meet this deadline. Consequently, the Tenant was faced
with two options, automatic termination of the Lease and forfeiture of its $25,000 Pre-
Lease deposit to the City, or electing to execute the Lease and crediting the $25,000
towards its security deposit, albeit without the benefit of a building permit in place. On
August 29, 2011, in accordance with the provisions of the Pre-Lease Agreement, the
Tenant elected to proceed in the execution of the Lease, committing to an October 13,
2011 Commencement Date as well as establishing a$1,000,000 escrow construction fund.
Concurrent with the execution of the Lease, the Tenant formally engaged Halloran
Construction (Contractor) and Design 3 Architects to further develop and finalize the plans
for permitting. The plans were submitted to the Building Department on October 4, 2011,
and are currently in process of being reviewed and commented upon. In order to expedite
work at the premises and in consideration of the extensive and delicate scope involved in
the demolition and sub-grade work that needs to precede the interior build-out, the
Contractor applied for a separate permit for partial interior demolition of the space, which
was approved by the Building Department on January 17, 2012. With demolition set to
commence the week of January 23, 2012, the Contractor estimates the interior build-out
to proceed by mid-February with completion tentatively scheduled by late June, early July,
2012.
ANALYSIS
On January 11, 2012, the Mayor and City Commission authorized the Administration to
proceed in separating out the retail portion of the Pennsylvania Avenue Garage via a
condominiumization process so as to ensure the continued tax exempt status of the
municipal parking garage. Part of the process involved the preparation of a certified
boundary survey, clearly delineating the retail and parking areas of the building. The
survey revealed the actual size of the retail space to be 7,655 square feet and not 7,807
square feet as defined in the Lease Agreement between the City and Penn 17, LLC, a
difference of 152 square feet.
In order to address this discrepancy, the Administration recommends amending the
Lease Agreement to reflect the adjusted square footage as provided for in the survey and
to reduce the annual base rent accordingly, from $585,525 to $574,125, a difference of
$11,400. The Tenant's Common Area Maintenance (CAM) cost will also need to be
reduced from $100,370 per year to$98,850 per year, a difference of$1,520. It should also
be noted that the reduction in annual rent will also reduce the brokerage fee due to Koniver
Stern by approximately $6,361.
2
Commission Memorandum
Penn 17, LLC- Retail Lease Amendment
February 8, 2012
Page 3 of 3
CONCLUSION
The Administration recommends adopting the Resolution.
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